Like the homegrown FMCG brand captured the middle class imagination with a glamorous advertising blitz using Bollywood divas in the 90s, Juneja siblings Rajeev and Ramesh have become disruptive warriors in their segment. And as with the management guru, corporate strategy has got them there.

Mankind has emerged as one the hottest private pharma companies, having seen biggies such as ChrysCapital re-invest within three years even as valuations doubled to a jaw-dropping $3.5 billion. Even in marketing, the Junejas are mavericks.

They dragged birth control and contraceptives out of our bedrooms and on to prime-time national television way back in 2007 through in-your-face, and at times even loud and cheesy, commercials. For much of Mankind’s 22 years, these former medical representatives from Meerut have been consistently striking gold at the bottom of the pyramid, selling drugs in smaller towns and rural India, priced lower than most others.

“When we invested in 2007, they did not fully understand what EBITDA stood for and their topline was barely `400 crore,” recalls Sanjiv Kaul, partner, ChrysCapital, the most successful pharma investor in India today. “Eight years later, we made 13x returns on exit. Their topline had grown eight -fold. They are now beautifully poised because of economies of scale. They can still give you quality medicines at affordable prices.” Closing FY18 with Rs 1,000 crore EBITDA, the Junejas are clearly fast learners.

CRANKING UP SALESBeing smart and scaleable are twin goals as the company gear up for its IPO in the coming fiscal. As it seeks a toehold in newer therapies and bigger cities, the strategy too is changing gears. The onus is as much on the patient as it is on the doctors.

But that’s where they will also face heightened scrutiny. For long, Mankind’s aggressive sales pitch and promotions have drawn industry -wide ire. Perceived sharp business practices and alleged political connections have dogged them, making several uncomfortable with their pace of growth. “I won’t be comfortable betting on them. Growth numbers have come at a cost,” quips the head of an MNC PE fund that had explored investment in Mankind but backed out eventually.

An executive at a rival company says on condition of anonymity, “High spend on sales promotion is not a reflection of their ad spend alone. The over-the-counter business accounts for only 10% of their sales. The spend is also on account of heavy doctor incentivisation.”

Such chatter shapes perceptions — despite revenue growing at a compounded annual growth rate of close to 20% between FY12 and FY17, rivalling the premier Sun Pharma in the domestic market.

“We are still in expansion mode. We continue to invest in launching divisions and entering new territories. For instance, we are still rolling out some divisions in Karnataka and Kerala — the reason for higher spends,” says Rajeev Juneja, 53. Industry analysts attribute Mankind’s rapid growth to its ability to penetrate markets unserved by larger companies and pitch products cheap. The very same reason, though, skews its portfolio towards semi-urban and rural areas.

“The likes of Lupin, Glaxo don’t even cover two lakh doctors, but Mankind managed to reach out to the remaining ones. In a way, their approach has been bottom up. They went after the most obscure medical practitioners and later climbed the ladder. As a result, Mankind has the largest prescription base in India,” explains Shakti Chakravarty, chief executive, Ergos Lifesciences, and former head of Lupin’s domestic formulations business.

MANKIND 2.0Since the turn of the decade, the company has focused on aggressively building a product suite for lifestyle diseases such as diabetes and hypertension (referred to as chronic therapy areas), which provide longer term and more predictable revenues, as opposed to medicines for common cold and fevers (acute therapies) such as antibiotics, where competition is intense and prices severely under pressure.

The shift in strategy and portfolio will require more nuanced research and development (R&D) and, possibly, a different strategy to address the urban market, though Juneja believes momentum is bound to ensure success everywhere.

“There is no doubt we have a lot of room for growth in urban markets and in chronic therapy area. After a while, fixed costs remain the same. With growth and momentum, productivity and operating profits increase. We want to maintain the same speed and add Rs 1,000 crore of topline every year,” he says.

Mankind is already larger than Eris Lifesciences, also backed by ChrysCapital. However, the Junejas have set sights to grow their chronic segment exponentially to half of their Rs 5,000 crore topline. Lifestyle diseases and neuropsychiatry will help reach top doctors but a change in company DNA may also be needed.

R&D is also being channelised towards a possible US market foray that is still in its rudimentary stages. Mankind is exploring the multi-billion dollar revenue opportunity in biosimilars, which US regulators have now opened up for competition. In the past seven years, the R&D team has grown to over 300.

“We will only explore these opportunities if there is a possibility to really add value. For the time being, the goal is to be India’s largest pharmaceutical company,” says Juneja. India will remain at the centre of growth, even with talks of price control and other sweeping reforms.

MARKETING BLITZThough almost 90% of Mankind’s revenues come from sale of pharma products and prescription-based medicines, its brand recall has more to do with its overthe-counter (OTC) products — condoms and pregnancy tests — by aggressive advertising using sports and filmstars.

Mankind spends an average of at least two times more on marketing and promotion activities than peers such as Cipla, according to industry analysts. This has ensured its margins remain in the 20% range, though Cipla is said to enjoy significantly higher margins.

How many entrepreneurs would dare to rely solely on outsourced active pharmaceutical ingredients (APIs) for the first 12 years of existence without a single manufacturing unit of their own? OTC products, backed by a strong distribution and retailer network, have worked miracles on the topline but detractors think the advertising strategy dilutes the seriousness of the business.

“With Sunny (Leone) being the face of their condom brand and Amitabh Bachchan leading the parent brand, I would advise them to stop trying too hard to run ahead,” feels Harish Bijoor, brand consultant and strategist. “If they want to enter the big league, they need to try less and acquire a very responsible image in the pharma industry. That will help this family-run business in a big way.”

WHAT’S WORKING FOR THEMMankind has the largest network of medical representatives in India. Sun Pharma’s 9,200-strong sales force pales in comparison to Mankind’s 12,000-plus. “Theirs is a highly-motivated workforce,” says a senior executive at a global pharma company,on condition of anonymity. “Full credit goes to Rajeev, who spends so much time on ground. The attrition rates are extremely low.”

The Junejas have split roles between themselves and among immediate and extended family to keep tight ‘control’ over the business. While Rajeev is responsible for the overall business, his nephew Arjun (brother and chairman Ramesh’s son) looks after manufacturing, R&D and new market forays. Nephew Sheetal Arora (son of Ramesh and Rajeev’s sister) looks after key division Lifestar, marketing arm for gynaecology, dermatology drugs. “They tend to bring a lot of family into the business in operational roles,” says the rival company executive quoted earlier. “They are trying to acquire talent but need to professionalise and create more management bandwidth.”

However, the brothers are clear. “Everything in Mankind is happening at the right pace. We have senior managers in key functions. Our head of marketing and product management are professional hires,” says Juneja, exuding the silent confidence that’s so generic to them.

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